Buried within Grupo Financiero Banorte's recent earnings call transcripts lies a story of transformation that most analysts seem to be overlooking. It's a story of strategic investment, calculated risk-taking, and a laser focus on a burgeoning economic wave: nearshoring. While everyone is busy analyzing the numbers, Banorte is quietly positioning itself as the financial powerhouse of this Mexican economic boom, and those who fail to recognize this are missing out on a potential goldmine.

The buzzword "nearshoring" is everywhere these days, but Banorte's approach isn't just about riding the wave – it's about mastering it. The company's proactive strategy goes far beyond mere rhetoric. We see a deliberate investment in human capital, with over 1,300 new bankers dedicated to commercial and SME clients and another 700 planned for 2024. This is no accident – it's a targeted move to capitalize on the surge in demand for credit from companies seizing the nearshoring opportunity.

Banorte recognizes that nearshoring isn't a fleeting trend, but a fundamental shift in global supply chains. They're building a robust infrastructure to support this long-term play, expanding their branch network by 150 branches in key northern and central regions, bolstering their ATM footprint, and equipping their personnel with the skills to develop and capture highly profitable, lasting businesses. This is a clear signal: Banorte is building a financial fortress specifically designed to withstand and capitalize on the nearshoring earthquake.

"What's even more fascinating is the depth of Banorte's vision. They see nearshoring in stages, and they are already ahead of the curve. The first stage, currently underway, is characterized by established companies in Mexico expanding their operations to meet rising demand. Banorte is strategically positioned to provide the financial muscle for this expansion, and their impressive loan portfolio growth in the commercial and corporate segments is a testament to this."

But Banorte isn't stopping there. They're looking ahead to the second stage of nearshoring, where entirely new businesses will flock to Mexico, drawn by the favorable economic conditions and the proximity to major markets. Banorte's strategic investments are laying the groundwork for this next wave, and they are poised to become the go-to financial partner for these incoming businesses.

Banorte's Loan Portfolio Growth by Segment

The following chart showcases Banorte's impressive loan portfolio growth, highlighting the contributions of key segments.

While the market is fixated on short-term metrics, Banorte is playing a different game altogether. They understand that the key to long-term success in nearshoring lies in building a foundation for sustained growth, and that's precisely what their investments are designed to do.

Consider this: Banorte's loan portfolio has surpassed the trillion pesos mark, driven primarily by the commercial and corporate segments. Their loan book is expanding at a rapid pace, but with a keen eye on asset quality. This combination of growth and risk management is what sets Banorte apart – they are not simply chasing growth, but pursuing sustainable growth. Even in the consumer segment, Banorte is showing exceptional strength. Their double-digit annual growth across all products is a reflection of Mexico's robust internal demand and GDP expansion. They are leveraging analytics and hyper-personalization to maximize customer lifetime value, particularly targeting high-value, low-leverage clients. This strategic approach indicates that Banorte is not only seeking to capture market share, but also to cultivate enduring, profitable relationships.

"Here's the hypothesis: As nearshoring gains momentum, Banorte's strategic positioning will yield a significant payoff. Their focus on commercial and corporate lending, coupled with their meticulous approach to asset quality, will drive superior returns. We can expect to see a continued expansion of their loan portfolio, with nearshoring-related businesses contributing a substantial portion of this growth. Moreover, their investments in human capital and infrastructure will further solidify their position as the leading financial partner for nearshoring companies."

This brings us to the numbers. Banorte's Q3 2023 earnings show a year-on-year ROE increase of 210 basis points. Their net income is 50% higher than the previous year, and most subsidiaries are reporting double-digit profit growth. Their cost control remains impressive, despite the pressure on funding costs, which they are strategically managing. All these indicators point towards a company that is not only performing well in the present, but is laying the foundation for even greater success in the future. The message is clear: Banorte is undergoing a quiet revolution, and the nearshoring wave is the catalyst. They are strategically investing in the future, building a robust infrastructure, and capturing market share with a focus on asset quality. This is a story that Wall Street can't afford to ignore, because those who miss out on Banorte's quiet revolution are missing out on a potential fortune.

"Fun Fact: Did you know that Banorte holds the Guinness World Record for the longest line of tacos? They created a 2.5-mile-long taco line in 2019, showcasing their commitment to their Mexican heritage and their love for good food!"